Financial Performance - Consolidated net income for the third quarter of 2021 was $7.8 million, or $2.16 per share, a 13.1% increase compared to $6.9 million, or $1.86 per share, in the third quarter of 2020[174]. - Adjusted net income for the third quarter of 2021 was $7.7 million, or $2.13 per share, representing a 12.0% increase from $6.9 million, or $1.85 per share, in the same period of 2020[175]. - The annualized return on average equity (ROE) for the third quarter of 2021 was 15.66%, up from 15.47% in the third quarter of 2020[174]. - Adjusted net income for the three months ended September 30, 2021, was $7,827,000, compared to $6,918,000 for the same period in 2020, reflecting a year-over-year increase of approximately 13.2%[360]. - Adjusted earnings per share for the three months ended September 30, 2021, was $2.13, up from $1.85 in the same period of 2020, representing a growth of 15.1%[360]. - The annualized return on average assets (ROA) for the three months ended September 30, 2021, was 1.44%, up from 1.39% in the same period of 2020, showing a positive trend[360]. Loan Performance - Average loans outstanding in the community banking segment increased by 5.7% for the third quarter of 2021 compared to the same period in 2020[180]. - The mortgage banking segment's net income decreased by 53% for the third quarter of 2021, with mortgage loan originations down 33% compared to the same period in 2020[180]. - Total loans amounted to $1,486,010,000 with an interest yield of 5.91% for the three months ended September 30, 2021[202]. - Total loans reached $1,507,412 thousand, with a net increase of $66,469 thousand, representing a growth rate of 4.65%[205]. - Average loans decreased $58.4 million to $1.49 billion for Q3 2021, while increasing $76.1 million to $1.51 billion for the first nine months of 2021 compared to the same periods in 2020[212]. - Mortgage loan originations decreased by 33.0% in the third quarter of 2021 compared to the same period in 2020, totaling $358,251,000[254]. Interest Income and Margin - Net interest income for the third quarter of 2021 was $21,749,000, compared to $21,009,000 for the same period in 2020[200]. - The consolidated annualized net interest margin was 4.25% for the third quarter of 2021, down from 4.54% in the third quarter of 2020[180]. - The interest rate spread decreased to 4.06% in Q3 2021 from 4.25% in Q3 2020[200]. - The company anticipates continued growth in net interest income driven by lower deposit costs and higher loan balances[209]. - Annualized net interest margin decreased 29 basis points to 4.25 percent for Q3 2021 compared to Q3 2020, primarily due to growth in lower yielding securities and cash reserves outpacing loan growth[211]. Asset Quality and Loan Losses - The provision for loan losses was $430,000 for the third quarter of 2021, a decrease of $2.9 million compared to the same period in 2020[180]. - The allowance for loan losses was $39,215,000, an increase from $37,417,000 in the previous period[202]. - The allowance for loan losses is deemed adequate to absorb probable losses inherent in the loan portfolio, with management monitoring economic recovery challenges[259]. - Total provision for loan losses decreased to $110, down from $9,550 in the previous period, indicating a significant reduction in expected loan losses[264]. - The ratio of annualized net charge-offs to average total loans outstanding for Community Banking was 0.01%, consistent with the previous period[264]. - The ratio of annualized net charge-offs to average total loans outstanding for Consumer Finance improved to (0.08)%, compared to 1.56% in the prior period, indicating better performance[264]. Noninterest Income and Expenses - Total noninterest income decreased $4.9 million, or 28.9 percent, in Q3 2021 compared to Q3 2020, primarily due to lower gains on sales of loans and lower mortgage banking fee income[223]. - Total noninterest expenses decreased by $2.2 million, or 8.5%, in Q3 2021 compared to Q3 2020, primarily due to lower salaries and benefits expense and mortgage banking loan processing expenses[227]. - Total noninterest expenses increased by $4.2 million, or 6.0%, in the first nine months of 2021 compared to the same period in 2020, driven by higher salaries and benefits expense and increased mortgage banking loan processing expenses[228]. Capital and Liquidity - Total equity increased to $205.2 million at September 30, 2021, from $194.5 million at December 31, 2020[181]. - The Corporation's total risk-based capital ratio was 15.5% as of September 30, 2021, exceeding the minimum requirement of 8.0%[346]. - The Corporation's Tier 1 leverage ratio was 9.7% as of September 30, 2021, above the minimum requirement of 4.0%[346]. - The Corporation's liquidity management aims to ensure continuous availability of funds to meet customer credit needs and demands from depositors and creditors[337]. Strategic Initiatives and Future Outlook - The company is focused on expanding its product offerings and branch consolidations as part of its strategic initiatives[365]. - The company anticipates potential impacts from the COVID-19 pandemic on asset quality and loan loss provisions, which may affect future financial performance[363]. - Forward-looking statements are based on management's beliefs and expectations, with no assurance that actual results will differ materially from those expressed[367].

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements and detailed notes for C&F Financial Corporation [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (Dollars in thousands) | Metric | June 30, 2021 | December 31, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Total cash and cash equivalents | $169,465 | $86,669 | 95.5% | | Securities—available for sale | $356,886 | $286,389 | 24.6% | | Loans held for sale | $119,038 | $214,266 | -44.5% | | Loans, net | $1,348,293 | $1,313,250 | 2.7% | | Total assets | $2,168,644 | $2,086,310 | 3.9% | | **Liabilities** | | | | | Total deposits | $1,831,562 | $1,752,173 | 4.5% | | Total liabilities | $1,966,846 | $1,891,839 | 4.0% | | **Equity** | | | | | Total equity | $201,798 | $194,471 | 3.8% | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income Highlights (Dollars in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total interest income | $23,866 | $23,584 | $46,942 | $48,362 | | Total interest expense | $2,138 | $3,330 | $4,538 | $7,505 | | Net interest income | $21,728 | $20,254 | $42,404 | $40,857 | | Provision for loan losses | $(600) | $3,600 | $(320) | $6,250 | | Total noninterest income | $13,100 | $11,828 | $27,456 | $18,576 | | Total noninterest expenses | $24,902 | $23,792 | $50,202 | $43,877 | | Net income attributable to C&F Financial Corporation | $8,008 | $3,746 | $15,069 | $7,324 | | Net income per share - basic and diluted | $2.19 | $1.03 | $4.11 | $2.01 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income Highlights (Dollars in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $8,090 | $3,743 | $15,255 | $7,382 | | Other comprehensive income (loss), net of tax | $636 | $1,317 | $(969) | $1,611 | | Comprehensive income attributable to C&F Financial Corporation | $8,644 | $5,063 | $14,100 | $8,935 | [Consolidated Statements of Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Equity) Consolidated Statements of Equity Highlights (Dollars in thousands) | Metric | Balance March 31, 2021 | Balance June 30, 2021 | Balance December 31, 2020 | Balance June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Common Stock | $3,526 | $3,439 | $3,514 | $3,510 | | Additional Paid-In Capital | $21,622 | $17,643 | $21,427 | $21,055 | | Retained Earnings | $176,481 | $183,043 | $170,819 | $158,799 | | Accumulated Other Comprehensive Loss, Net | $(3,560) | $(2,924) | $(1,955) | $(638) | | Total Equity | $198,692 | $201,798 | $194,471 | $183,265 | | Common stock purchased (3 months) | N/A | $(4,536) | N/A | N/A | | Common stock purchased (6 months) | N/A | $(4,765) | N/A | $(618) | | Cash dividends declared (3 months) | N/A | $(1,446) | N/A | $(1,385) | | Cash dividends declared (6 months) | N/A | $(2,845) | N/A | $(2,773) | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Dollars in thousands) | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $105,661 | $(66,492) | | Net cash used in investing activities | $(97,489) | $(121,774) | | Net cash provided by financing activities | $74,624 | $103,133 | | Net increase (decrease) in cash and cash equivalents | $82,796 | $(85,133) | | Cash and cash equivalents at end of period | $169,465 | $80,300 | [Notes to Consolidated Interim Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Interim%20Financial%20Statements) [NOTE 1: Summary of Significant Accounting Policies](index=12&type=section&id=NOTE%201%3A%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the Corporation's accounting policies, consolidation principles, and the upcoming adoption of ASC 326 (CECL) - The Corporation is a bank holding company with wholly-owned subsidiaries including C&F Bank, C&F Mortgage Corporation, C&F Finance Company, and C&F Wealth Management Corporation, engaged in commercial banking, residential mortgages, automobile/marine/RV loans, and wealth management services[33](index=33&type=chunk)[34](index=34&type=chunk) - Estimates for the allowance for loan losses at June 30, 2021, include probable losses related to the **COVID-19 pandemic**, with significant uncertainty remaining regarding its ultimate financial impact[36](index=36&type=chunk) Share-Based Compensation Expense (Dollars in thousands) | Period | 2021 (After Tax) | 2020 (After Tax) | | :--- | :--- | :--- | | Three months ended June 30 | $304 | $217 | | Six months ended June 30 | $592 | $435 | - **ASC 326 (CECL)** will be effective for the Corporation on January 1, 2023, introducing an expected loss approach for credit losses, which is anticipated to result in significant changes to financial statements, including the allowance for credit losses, a reduction in total equity and regulatory capital, and expanded disclosures[46](index=46&type=chunk)[47](index=47&type=chunk) [NOTE 2: Business Combination](index=15&type=section&id=NOTE%202%3A%20Business%20Combination) This note details the acquisition of Peoples Bankshares, Incorporated, including the purchase price, goodwill, and acquired loans - On January 1, 2020, the Corporation acquired Peoples Bankshares, Incorporated for an aggregate purchase price of **$22.19 million** (cash: $10.58 million, common stock: $11.61 million)[49](index=49&type=chunk)[53](index=53&type=chunk) - The acquisition resulted in the recognition of **$10.77 million in goodwill** and **$1.71 million in core deposit intangible assets**, which will be amortized over 15 years[53](index=53&type=chunk) - Loans acquired from Peoples had an aggregate outstanding principal of **$131.92 million** and an estimated fair value of **$124.20 million**, with the discount representing expected credit losses and market interest rate adjustments[55](index=55&type=chunk) [NOTE 3: Securities](index=20&type=section&id=NOTE%203%3A%20Securities) This note provides a breakdown of the Corporation's debt securities, all classified as available for sale, by type and maturity Securities Available for Sale (Dollars in thousands) | Category | June 30, 2021 Fair Value | December 31, 2020 Fair Value | | :--- | :--- | :--- | | U.S. government agencies and corporations | $60,898 | $48,282 | | Mortgage-backed securities | $180,222 | $123,714 | | Obligations of states and political subdivisions | $100,284 | $102,805 | | Corporate and other debt securities | $15,482 | $11,588 | | Total | $356,886 | $286,389 | - At June 30, 2021, 104 debt securities with an aggregate fair value of **$143.42 million** were considered temporarily impaired, primarily due to fluctuations in interest rates[68](index=68&type=chunk)[69](index=69&type=chunk) - Securities with an aggregate fair value of **$153.39 million** were pledged at June 30, 2021, primarily to secure public deposits and repurchase agreements[67](index=67&type=chunk) [NOTE 4: Loans](index=23&type=section&id=NOTE%204%3A%20Loans) This note details the Corporation's loan portfolio, including major classifications, acquired loans, and impaired loans Major Loan Classifications (Dollars in thousands) | Loan Type | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Real estate – residential mortgage | $218,189 | $218,298 | | Commercial, financial and agricultural | $730,177 | $700,215 | | Consumer finance | $332,873 | $312,252 | | Total loans | $1,387,244 | $1,352,406 | Acquired Loans (Dollars in thousands) | Category | June 30, 2021 Carrying Amount | December 31, 2020 Carrying Amount | | :--- | :--- | :--- | | Purchased Credit Impaired (PCI) | $5,370 | $6,359 | | Purchased Performing | $67,529 | $87,096 | | Total acquired loans | $72,899 | $93,455 | - Accretable yield for PCI loans decreased from **$4.05 million** at the beginning of 2021 to **$3.34 million** at June 30, 2021, primarily due to accretion of $1.54 million, partially offset by reclassification of nonaccretable difference[76](index=76&type=chunk) Impaired Loans and Related Allowance (Dollars in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Impaired Loans (Recorded Investment) | $5,495 | $6,278 | | Related Allowance | $827 | $879 | | Total TDRs | $2,898 | $3,575 | [NOTE 5: Allowance for Loan Losses](index=26&type=section&id=NOTE%205%3A%20Allowance%20for%20Loan%20Losses) This note details changes in the allowance for loan losses by major loan classification and impairment methodology Allowance for Loan Losses Activity (Six Months Ended June 30, Dollars in thousands) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Balance at December 31 | $39,156 | $32,873 | | Provision (credited) charged to operations | $(320) | $6,250 | | Loans charged off | $(2,523) | $(5,577) | | Recoveries of loans previously charged off | $2,638 | $2,548 | | Balance at June 30 | $38,951 | $36,094 | Allowance for Loan Losses by Impairment Methodology (June 30, 2021, Dollars in thousands) | Category | Individually Evaluated | Collectively Evaluated | Acquired Loans - PCI | Total | | :--- | :--- | :--- | :--- | :--- | | Allowance balance attributable to loans | $827 | $38,124 | $0 | $38,951 | | Loans | $5,495 | $1,376,379 | $5,370 | $1,387,244 | Loans by Credit Quality Indicators (June 30, 2021, Dollars in thousands) | Category | Pass | Special Mention | Substandard | Substandard Nonaccrual | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Real estate – residential mortgage | $216,599 | $864 | $455 | $271 | $218,189 | | Commercial, financial and agricultural | $703,539 | $16,793 | $7,496 | $2,349 | $730,177 | | Consumer finance | $332,735 (Performing) | N/A | N/A | $138 (Non-Performing) | $332,873 | | Total (excluding Consumer Finance breakdown) | $1,025,632 | $17,874 | $7,952 | $2,913 | $1,054,371 | [NOTE 6: Goodwill and Other Intangible Assets](index=29&type=section&id=NOTE%206%3A%20Goodwill%20and%20Other%20Intangible%20Assets) This note reports the carrying amount of goodwill and other intangible assets, which decreased slightly due to amortization - The carrying amount of goodwill was **$25.19 million** at June 30, 2021, and December 31, 2020, with no changes during the first six months of 2021[93](index=93&type=chunk) Other Intangible Assets (Dollars in thousands) | Category | Gross Carrying Amount (June 30, 2021) | Accumulated Amortization (June 30, 2021) | Net (June 30, 2021) | | :--- | :--- | :--- | :--- | | Core deposit intangibles | $1,711 | $(248) | $1,463 | | Other amortizable intangibles | $1,405 | $(734) | $671 | | Total | $3,116 | $(982) | $2,134 | - Amortization expense for other intangible assets was **$157,000** for the six months ended June 30, 2021, down from $166,000 in the prior year period[94](index=94&type=chunk) [NOTE 7: Equity, Other Comprehensive Income and Earnings Per Share](index=30&type=section&id=NOTE%207%3A%20Equity%2C%20Other%20Comprehensive%20Income%20and%20Earnings%20Per%20Share) This note details changes in equity, including share repurchases, AOCI components, and EPS calculations - The Corporation repurchased **97,714 shares** for an aggregate cost of **$4.74 million** under its share repurchase program by June 30, 2021[96](index=96&type=chunk) Accumulated Other Comprehensive Loss, Net (Dollars in thousands) | Component | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Net unrealized gains on securities | $2,801 | $4,397 | | Net unrecognized losses on cash flow hedges | $(809) | $(1,367) | | Net unrecognized losses on defined benefit plan | $(4,916) | $(4,985) | | Total accumulated other comprehensive loss, net | $(2,924) | $(1,955) | Earnings Per Share (EPS) Calculation | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to C&F Financial Corporation | $8,008 | $3,746 | $15,069 | $7,324 | | Weighted average shares outstanding | 3,653,568 | 3,647,707 | 3,664,752 | 3,646,161 | | Net income per share - basic and diluted | $2.19 | $1.03 | $4.11 | $2.01 | [NOTE 8: Employee Benefit Plans](index=32&type=section&id=NOTE%208%3A%20Employee%20Benefit%20Plans) This note summarizes the components of net periodic benefit cost for the Bank's noncontributory cash balance pension plan Net Periodic Benefit Cost (Dollars in thousands) | Component | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Service cost | $498 | $415 | $985 | $801 | | Other components of net periodic benefit cost | $(270) | $(191) | $(551) | $(405) | | Net periodic benefit cost | $228 | $224 | $434 | $396 | [NOTE 9: Fair Value of Assets and Liabilities](index=32&type=section&id=NOTE%209%3A%20Fair%20Value%20of%20Assets%20and%20Liabilities) This note defines the three-level fair value hierarchy and details valuation techniques for assets and liabilities - The Corporation primarily uses **Level 2** fair value measurements for its investment portfolio, loans held for sale, and derivative financial instruments (IRLCs, interest rate swaps, cash flow hedges, forward sales of TBA securities)[113](index=113&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) Financial Assets Measured at Fair Value on a Recurring Basis (June 30, 2021, Dollars in thousands) | Asset Category | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--- | :--- | :--- | :--- | :--- | | Securities available for sale | $0 | $356,886 | $0 | $356,886 | | Loans held for sale | $0 | $119,038 | $0 | $119,038 | | Derivatives (IRLC, Interest rate swaps) | $0 | $8,929 | $0 | $8,929 | | Total Assets | $0 | $484,853 | $0 | $484,853 | - Other Real Estate Owned (OREO) is measured at fair value on a nonrecurring basis and classified as **Level 3**, with a fair value of **$22,000** at June 30, 2021, based on appraisals and a 75% discount to reflect market conditions and selling costs[131](index=131&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk) [NOTE 10: Business Segments](index=42&type=section&id=NOTE%2010%3A%20Business%20Segments) This note outlines the operating results for the Corporation's three business segments and details inter-segment transactions - The Corporation operates in three business segments: **community banking** (C&F Bank and C&F Wealth Management), **mortgage banking** (C&F Mortgage Corporation), and **consumer finance** (C&F Finance Company)[142](index=142&type=chunk)[143](index=143&type=chunk) Net Income by Business Segment (Dollars in thousands) | Segment | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Community Banking | $3,925 | $294 | $6,718 | $951 | | Mortgage Banking | $1,968 | $2,321 | $4,513 | $3,864 | | Consumer Finance | $2,875 | $1,638 | $5,402 | $3,568 | | Other (Loss) | $(657) | $(510) | $(1,309) | $(1,001) | | Eliminations (Loss) | $(21) | $0 | $(69) | $0 | | Consolidated Net Income | $8,090 | $3,743 | $15,255 | $7,382 | - The community banking segment provides funding to the mortgage banking and consumer finance segments through warehouse lines of credit and variable/fixed rate notes, with these inter-segment transactions eliminated in consolidated totals[148](index=148&type=chunk) [NOTE 11: Commitments and Contingent Liabilities](index=46&type=section&id=NOTE%2011%3A%20Commitments%20and%20Contingent%20Liabilities) This note details the Corporation's off-balance sheet commitments and contingent liabilities related to mortgage banking - Loan commitments totaled **$321.72 million** at June 30, 2021, and standby letters of credit totaled **$17.61 million**, representing potential future credit exposure[150](index=150&type=chunk)[151](index=151&type=chunk) - The mortgage banking segment has contingent liabilities from representations and warranties on sold residential mortgage loans, with an allowance for indemnifications of **$3.39 million** at June 30, 2021[152](index=152&type=chunk)[154](index=154&type=chunk) - Provision for indemnifications decreased significantly to **$32,000** for the six months ended June 30, 2021, from $163,000 in the prior year period[152](index=152&type=chunk)[154](index=154&type=chunk) [NOTE 12: Derivative Financial Instruments](index=47&type=section&id=NOTE%2012%3A%20Derivative%20Financial%20Instruments) This note describes the Corporation's use of derivative financial instruments to manage interest rate risk - The Corporation uses interest rate swaps as cash flow hedges to manage variability in cash flows on **$25.0 million** of trust preferred capital notes, with a fair value of **$1.13 million** in other liabilities at June 30, 2021[156](index=156&type=chunk)[164](index=164&type=chunk) - Customer-related interest rate swaps (matched with dealer counterparties) had a total notional amount of **$84.13 million** at June 30, 2021, with a net fair value of zero[159](index=159&type=chunk)[164](index=164&type=chunk) - Mortgage banking derivatives, including IRLCs (**$154.74 million** notional) and forward sales of TBA securities (**$15.25 million** notional), are used to mitigate interest rate risk on mortgage loans held for sale[160](index=160&type=chunk)[164](index=164&type=chunk) - Cash collateral of **$6.44 million** was maintained with dealer counterparties for derivative instruments in a loss position at June 30, 2021[164](index=164&type=chunk) [NOTE 13: Other Noninterest Expenses](index=50&type=section&id=NOTE%2013%3A%20Other%20Noninterest%20Expenses) This note provides a detailed breakdown of the significant components within the 'Other' category of noninterest expenses Other Noninterest Expenses (Six Months Ended June 30, Dollars in thousands) | Expense Category | 2021 | 2020 | | :--- | :--- | :--- | | Data processing fees | $5,728 | $5,535 | | Mortgage banking loan processing expenses | $1,761 | $1,264 | | Professional fees | $1,484 | $1,718 | | All other noninterest expenses | $3,832 | $3,817 | | Total other noninterest expenses | $14,325 | $14,505 | - Merger-related expenses, which totaled **$898,000** for the six months ended June 30, 2020, were not incurred during the first six months of 2021[167](index=167&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides its perspective on financial condition, results of operations, key metrics, and critical accounting policies [OVERVIEW](index=51&type=section&id=OVERVIEW) Consolidated net income significantly increased in 2021, driven by community banking and consumer finance segment performance Consolidated Financial Performance Highlights | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Income (in millions) | $8.1 | $3.7 | $15.3 | $7.4 | | EPS | $2.19 | $1.03 | $4.11 | $2.01 | | Annualized ROE | 16.49% | 8.41% | 15.83% | 8.34% | | Annualized ROA | 1.50% | 0.77% | 1.43% | 0.78% | | Adjusted Net Income (in millions) | $8.1 | $4.0 | $15.3 | $8.4 | | Adjusted EPS | $2.19 | $1.11 | $4.11 | $2.30 | | Adjusted Annualized ROE | 16.49% | 9.00% | 15.83% | 9.53% | | Adjusted Annualized ROA | 1.50% | 0.82% | 1.43% | 0.89% | - Consolidated net income **increased 116% for Q2 2021** and **107% for H1 2021** YoY, primarily due to higher net income in the community banking and consumer finance segments[173](index=173&type=chunk)[175](index=175&type=chunk) - The Corporation recorded a **net reversal of provision for loan losses of $600,000 for Q2 2021** and **$320,000 for H1 2021**, as credit deterioration from COVID-19 was less than anticipated, leading to a release of reserves[177](index=177&type=chunk) - Total equity increased to **$201.8 million** at June 30, 2021, from $194.5 million at December 31, 2020, driven by earnings, partially offset by **$4.8 million in share repurchases** and **$0.78 per share in cash dividends**[178](index=178&type=chunk)[180](index=180&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=55&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section highlights critical accounting policies requiring significant management judgment, such as the ALL and goodwill - The **allowance for loan losses (ALL)** is a critical estimate, inherently subjective, based on factors like delinquencies, charge-offs, portfolio changes, economic conditions, and collateral values, susceptible to significant revision[183](index=183&type=chunk)[185](index=185&type=chunk) - Loans acquired in business combinations are classified as either **purchased credit-impaired (PCI)** or **purchased performing** and are recorded at fair value[187](index=187&type=chunk)[188](index=188&type=chunk)[190](index=190&type=chunk) - **Goodwill** is reviewed at least annually for impairment, with the last evaluation in Q4 2020 concluding no impairment[192](index=192&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) [RESULTS OF OPERATIONS](index=59&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes changes in net interest income, noninterest income and expense, and segment performance [NET INTEREST INCOME](index=59&type=section&id=NET%20INTEREST%20INCOME) Net interest income increased due to higher average interest-earning assets, though the net interest margin decreased Net Interest Income (Taxable-Equivalent Basis, Dollars in thousands) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $21,869 | $20,420 | $42,689 | $41,185 | | Annualized Net Interest Margin | 4.37% | 4.61% | 4.35% | 4.76% | | Yield on interest-earning assets | 4.80% | 5.36% | 4.81% | 5.63% | | Cost of interest-bearing liabilities | 0.63% | 1.03% | 0.68% | 1.16% | - Average interest-earning assets **grew by $225.4 million for Q2 2021** and **$238.8 million for H1 2021** YoY, primarily from growth in loans (including PPP loans) and securities, funded by deposit growth[206](index=206&type=chunk) - The overall yield on average loans **decreased by 19 basis points to 6.00% for Q2 2021** and **72 basis points to 5.89% for H1 2021** YoY, mainly due to lower average yields at the consumer finance segment and changes in portfolio composition[210](index=210&type=chunk) - Net PPP origination fees recognized were **$1.2 million for Q2 2021** and **$2.1 million for H1 2021**, significantly higher than the prior year, contributing to loan interest income[210](index=210&type=chunk) - Average cost of interest-bearing deposits **decreased by 42 basis points for Q2 2021** and **45 basis points for H1 2021** YoY, due to lower rates on time deposits and a shift towards non-time deposits[214](index=214&type=chunk) [Noninterest Income](index=67&type=section&id=Noninterest%20Income) Noninterest income grew, driven by higher gains on loan sales, interchange income, and mortgage lender services income Total Noninterest Income (Dollars in thousands) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Gains on sales of loans | $5,947 | $4,605 | $13,005 | $8,281 | | Mortgage banking fee income | $1,648 | $1,986 | $3,504 | $3,291 | | Interchange income | $1,471 | $1,141 | $2,789 | $2,230 | | Other income, net | $1,487 | $1,912 | $2,891 | $382 | | Total noninterest income | $13,100 | $11,828 | $27,456 | $18,576 | - Total noninterest income **increased by $1.3 million (10.8%) in Q2 2021** and **$8.9 million (47.8%) in H1 2021** YoY[219](index=219&type=chunk) - Higher gains on sales of loans were primarily due to **higher margins on loans originated for resale**, despite lower mortgage loan production volume in Q2 2021[219](index=219&type=chunk) [Noninterest Expense](index=67&type=section&id=Noninterest%20Expense) Noninterest expenses increased due to higher salaries and mortgage-related costs, partially offset by lower merger expenses Total Noninterest Expenses (Dollars in thousands) | Expense Category | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $15,714 | $14,354 | $31,327 | $25,171 | | Occupancy expense | $2,190 | $2,154 | $4,550 | $4,201 | | Other expenses | $6,998 | $7,284 | $14,325 | $14,505 | | Total noninterest expense | $24,902 | $23,792 | $50,202 | $43,877 | - Total noninterest expenses **increased by $1.1 million (4.7%) in Q2 2021** and **$6.3 million (14.4%) in H1 2021** YoY[221](index=221&type=chunk) - Merger-related expenses, which were **$439,000 in Q2 2020** and **$1.4 million in H1 2020**, were not incurred in the first six months of 2021[222](index=222&type=chunk) [Income Taxes](index=69&type=section&id=Income%20Taxes) The consolidated effective income tax rate increased in 2021 compared to 2020, which included a one-time tax benefit - The consolidated effective income tax rate was **23.6% for H1 2021**, compared to 20.7% for H1 2020[223](index=223&type=chunk) - A **$303,000 income tax benefit** was recognized in Q2 and H1 2020 due to a change in tax law related to net operating losses from the Peoples acquisition[223](index=223&type=chunk) [Business Segments](index=69&type=section&id=Business%20Segments) Community Banking and Consumer Finance reported significant net income increases, while Mortgage Banking results were mixed [Community Banking](index=69&type=section&id=Community%20Banking) The Community Banking segment's net income increased substantially due to higher net interest income and lower loan loss provisions Community Banking Segment Net Income (Dollars in thousands) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $3,925 | $294 | $6,718 | $951 | | Adjusted net income | $3,925 | $560 | $6,718 | $1,902 | | Net interest income | $14,479 | $12,176 | $27,931 | $24,947 | | Provision for loan losses | $(200) | $1,400 | $(200) | $2,400 | - Net PPP origination fees recognized were **$1.2 million for Q2 2021** and **$2.1 million for H1 2021**, significantly impacting loan interest income[233](index=233&type=chunk) - Merger-related expenses of **$439,000 in Q2 2020** and **$1.3 million in H1 2020** were not incurred in 2021, contributing to improved net income[235](index=235&type=chunk) [Mortgage Banking](index=73&type=section&id=Mortgage%20Banking) The Mortgage Banking segment's net income was influenced by loan origination volumes, margins, and higher operating expenses Mortgage Banking Segment Net Income (Dollars in thousands) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $1,968 | $2,321 | $4,513 | $3,864 | | Gains on sales of loans | $5,957 | $4,605 | $13,062 | $8,281 | | Mortgage loan originations | $381,308 | $448,281 | $803,811 | $708,631 | | Mortgage loans sold | $437,554 | $395,494 | $895,737 | $621,532 | - Mortgage loan originations **decreased 14.9% in Q2 2021** but **increased 13.4% in H1 2021** YoY[247](index=247&type=chunk) - Locked loan commitments **decreased by $37.7 million in Q2 2021** and **$43.9 million in H1 2021**, indicating a moderation in production[247](index=247&type=chunk) [Consumer Finance](index=75&type=section&id=Consumer%20Finance) The Consumer Finance segment's net income increased, driven by a significant decrease in provision for loan losses Consumer Finance Segment Net Income (Dollars in thousands) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $2,875 | $1,638 | $5,402 | $3,568 | | Interest income | $9,421 | $9,689 | $18,670 | $19,790 | | Provision for loan losses | $(430) | $2,200 | $(180) | $3,850 | - Provision for loan losses **decreased by $2.6 million for Q2 2021** and **$4.0 million for H1 2021** YoY, due to lower net charge-offs and a release of COVID-19 related reserves[253](index=253&type=chunk) - Interest income decreased due to **lower average loan yields**, as the segment focused on higher credit quality loans (marine and RV) and experienced lower interest rates for non-prime auto loans[253](index=253&type=chunk) [ASSET QUALITY](index=75&type=section&id=ASSET%20QUALITY) This section details the allowance for loan losses, nonperforming assets, and impaired loans, showing improved credit quality [Allowance for Loan Losses](index=75&type=section&id=Allowance%20for%20Loan%20Losses) The allowance for loan losses decreased slightly, reflecting a net reversal of provision and improved credit quality indicators Allowance for Loan Losses Activity (Six Months Ended June 30, Dollars in thousands) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Balance, beginning of period | $39,156 | $32,873 | | Total provision for loan losses | $(320) | $6,250 | | Net loans charged off | $115 | $(3,029) | | Balance, end of period | $38,951 | $36,094 | Allocation of Allowance for Loan Losses (Dollars in thousands) | Loan Type | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Real estate—residential mortgage | $2,814 | $2,914 | | Commercial, financial and agricultural | $11,028 | $10,696 | | Consumer finance | $23,449 | $23,513 | | Total allowance for loan losses | $38,951 | $39,156 | - The consumer finance segment experienced annualized **net recoveries of 0.07%** of average total loans for H1 2021, compared to net charge-offs of 1.99% for H1 2020, reflecting improved loan performance and a strong used car market[282](index=282&type=chunk)[284](index=284&type=chunk) [Nonperforming Assets](index=82&type=section&id=Nonperforming%20Assets) Nonperforming assets decreased across both the community banking and consumer finance segments, reflecting improved credit quality Community Banking Segment Nonperforming Assets (Dollars in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Nonaccrual loans | $2,883 | $2,971 | | OREO | $857 | $907 | | Total nonperforming assets | $3,740 | $3,878 | | ALL to total nonaccrual loans | 514.53% | 506.06% | Consumer Finance Segment Nonperforming Assets (Dollars in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Nonaccrual loans | $138 | $402 | | Repossessed assets | $151 | $291 | | ALL to total consumer finance loans | 7.04% | 7.53% | - Total delinquent loans as a percentage of total loans for the consumer finance segment **decreased to 1.77%** at June 30, 2021, from 3.08% at December 31, 2020[282](index=282&type=chunk) [Impaired Loans](index=86&type=section&id=Impaired%20Loans) Impaired loans, including TDRs, decreased, and most COVID-19 modified loans are performing as per their modified terms Impaired Loans and Related Allowance (Dollars in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Impaired Loans (Unpaid Principal Balance) | $5,684 | $6,420 | | Related Allowance | $827 | $879 | | Total TDRs | $2,898 | $3,575 | - The Corporation granted COVID-19 related loan modifications on aggregate balances of **$103.6 million** since the pandemic began[292](index=292&type=chunk) [FINANCIAL CONDITION](index=87&type=section&id=FINANCIAL%20CONDITION) Total assets increased, driven by growth in cash, securities, and loans, funded primarily by an increase in deposits [Loan Portfolio](index=87&type=section&id=Loan%20Portfolio) The total loan portfolio increased, driven by growth in commercial and consumer finance loans, including PPP loans Summary of Loans Held for Investment (Dollars in thousands) | Loan Type | June 30, 2021 Amount | June 30, 2021 Percent | December 31, 2020 Amount | December 31, 2020 Percent | | :--- | :--- | :--- | :--- | :--- | | Real estate—residential mortgage | $218,189 | 16% | $218,298 | 16% | | Commercial, financial, and agricultural | $730,177 | 52% | $700,215 | 52% | | Consumer finance | $332,873 | 24% | $312,252 | 23% | | Total loans | $1,387,244 | 100% | $1,352,406 | 100% | Paycheck Protection Program Loans (Dollars in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Outstanding principal | $64,666 | $78,684 | | Unrecognized deferred fees, net | $(2,637) | $(2,157) | | Net balance | $62,029 | $76,527 | Exposure to Sensitive Industries (June 30, 2021, Dollars in thousands) | Industry | Balance | Exposure | | :--- | :--- | :--- | | Apartments | $86,046 | $96,281 | | Health care | $64,859 | $65,702 | | Commercial real estate - retail | $43,987 | $47,770 | | Hospitality | $11,061 | $31,741 | [Investment Securities](index=89&type=section&id=Investment%20Securities) The investment portfolio increased, primarily due to purchases of mortgage-backed and U.S. government agency securities Securities Available for Sale (Dollars in thousands) | Category | June 30, 2021 Amount | June 30, 2021 Percent | December 31, 2020 Amount | December 31, 2020 Percent | | :--- | :--- | :--- | :--- | :--- | | U.S. government agencies and corporations | $60,898 | 17% | $48,282 | 17% | | Mortgage-backed securities | $180,222 | 51% | $123,714 | 43% | | Obligations of states and political subdivisions | $100,284 | 28% | $102,805 | 36% | | Corporate and other debt securities | $15,482 | 4% | $11,588 | 4% | | Total | $356,886 | 100% | $286,389 | 100% | - Securities available for sale **increased by $70.5 million to $356.9 million** at June 30, 2021, from $286.4 million at December 31, 2020, primarily due to purchases of mortgage-backed securities and U.S. government agency debt securities[310](index=310&type=chunk) [Deposits](index=89&type=section&id=Deposits) Total deposits increased, driven by growth in non-time deposits, while time deposits and brokered deposits decreased - Deposits **increased by $79.4 million to $1.83 billion** at June 30, 2021, from $1.75 billion at December 31, 2020[314](index=314&type=chunk) - **Non-time deposits increased by $99.0 million**, while time deposits decreased by $19.6 million, influenced by PPP loans, government payments, and lower interest rates[314](index=314&type=chunk) - Brokered deposits significantly **decreased to $4,000** at June 30, 2021, from $6.1 million at December 31, 2020, as the Corporation uses them for liquidity diversification rather than long-term strategy[315](index=315&type=chunk) [Borrowings](index=91&type=section&id=Borrowings) Total borrowings increased slightly due to fluctuations in short-term borrowings with commercial customers - Borrowings **increased to $79.4 million** at June 30, 2021, from $76.2 million at December 31, 2020, mainly due to fluctuations in short-term borrowings[316](index=316&type=chunk) [Off-Balance Sheet Arrangements](index=91&type=section&id=Off-Balance%20Sheet%20Arrangements) The Corporation utilizes derivative financial instruments to manage interest rate risk in its mortgage banking operations - At June 30, 2021, the mortgage banking segment managed interest rate risk for **$143.9 million of IRLCs** and **$104.4 million of loans held for sale** using **$248.3 million in best-efforts forward sales contracts**[318](index=318&type=chunk) - The Corporation uses interest rate swaps as cash flow hedges to convert variable rates on **$25.0 million of trust preferred capital notes** to fixed rates, with a fair value of **$1.1 million** in other liabilities at June 30, 2021[321](index=321&type=chunk) - Cash collateral of **$6.4 million** was maintained with dealer counterparties for derivative instruments in a loss position at June 30, 2021[324](index=324&type=chunk) [Contractual Obligations](index=93&type=section&id=Contractual%20Obligations) There have been no material changes to contractual obligations since the 2020 Annual Report on Form 10-K - No material changes to contractual obligations have occurred since December 31, 2020[325](index=325&type=chunk) [Liquidity](index=93&type=section&id=Liquidity) The Corporation maintains sufficient liquidity, supported by stable core deposits, strong capital, and various funding sources - Liquid assets, including cash, interest-bearing deposits, and nonpledged securities, totaled **$373.0 million** at June 30, 2021, an increase from $227.9 million at December 31, 2020[327](index=327&type=chunk) Available Funding Sources (June 30, 2021, Dollars in thousands) | Funding Source | Capacity | Outstanding | Available | | :--- | :--- | :--- | :--- | | Unsecured federal funds agreements | $95,000 | $0 | $95,000 | | Repurchase lines of credit | $35,000 | $0 | $35,000 | | Borrowings from FHLB | $187,380 | $0 | $187,380 | | Borrowings from Federal Reserve Bank | $115,851 | $0 | $115,851 | | Revolving bank line of credit | $50,000 | $0 | $50,000 | | Total | $483,231 | $0 | $483,231 | - The Corporation pledged additional loans as collateral to increase available liquidity at the FHLB during the first six months of 2021[328](index=328&type=chunk) [Capital Resources](index=95&type=section&id=Capital%20Resources) The Corporation and its Bank maintain strong regulatory capital ratios, exceeding all minimum and well-capitalized requirements Regulatory Capital Ratios (June 30, 2021) | Metric | Corporation Actual Ratio | Bank Actual Ratio | | :--- | :--- | :--- | | Total risk-based capital ratio | 15.8% | 14.6% | | Tier 1 risk-based capital ratio | 13.0% | 13.3% | | Common Equity Tier 1 capital ratio | 11.4% | 13.3% | | Tier 1 leverage ratio | 9.6% | 9.8% | - The Corporation's total capital includes **$24.0 million in subordinated notes**, with $20.0 million issued in Q3 2020 to support general corporate purposes and future growth[342](index=342&type=chunk) - The Corporation repurchased **$4.5 million** of its common stock during the first six months of 2021 under its program authorized in November 2020[343](index=343&type=chunk) [Effects of Inflation and Changing Prices](index=97&type=section&id=Effects%20of%20Inflation%20and%20Changing%20Prices) Management believes changes in interest rates have a greater effect on financial condition than inflation - The primary effect of inflation on the Corporation's operations is reflected in **increased operating costs**[344](index=344&type=chunk) - **Changes in interest rates** are considered to affect the Corporation's financial condition to a far greater degree than changes in the inflation rate, influenced by economic conditions and government policies[344](index=344&type=chunk) [USE OF CERTAIN NON-GAAP FINANCIAL MEASURES](index=97&type=section&id=USE%20OF%20CERTAIN%20NON-GAAP%20FINANCIAL%20MEASURES) This section explains the use of non-GAAP measures to provide meaningful information about operating performance - Non-GAAP measures like adjusted net income, adjusted EPS, adjusted ROE, adjusted ROA, tangible book value per share, and FTE net interest income are used to provide meaningful information about operating performance by excluding non-recurring items, intangible assets, and inconsistent tax benefits[345](index=345&type=chunk)[346](index=346&type=chunk) Reconciliation of Non-GAAP Financial Measures (Dollars in thousands except for per share data) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income, as reported | $8,090 | $3,743 | $15,255 | $7,382 | | Adjusted net income | $8,090 | $4,009 | $15,255 | $8,433 | | Earnings per share - basic and diluted, as reported | $2.19 | $1.03 | $4.11 | $2.01 | | Adjusted earnings per share - basic and diluted | $2.19 | $1.11 | $4.11 | $2.30 | | Annualized ROE, as reported | 16.49% | 8.41% | 15.83% | 8.34% | | Adjusted annualized ROE | 16.49% | 9.00% | 15.83% | 9.53% | | Annualized ROA, as reported | 1.50% | 0.77% | 1.43% | 0.78% | | Adjusted annualized ROA | 1.50% | 0.82% | 1.43% | 0.89% | | FTE net interest income | $21,869 | $20,423 | $42,689 | $41,188 | Tangible Book Value Per Share (Dollars in thousands except for per share data) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Equity attributable to C&F Financial Corporation | $201,201 | $193,805 | | Less goodwill | $25,191 | $25,191 | | Less other intangible assets | $2,134 | $2,291 | | Tangible equity attributable to C&F Financial Corporation | $173,876 | $166,323 | | Shares outstanding | 3,591,902 | 3,670,301 | | Book value per share | $56.02 | $52.80 | | Tangible book value per share | $48.41 | $45.32 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=102&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the Corporation's market risk disclosures since its 2020 Annual Report - No material changes in quantitative and qualitative disclosures about market risk from the 2020 Annual Report on Form 10-K[358](index=358&type=chunk) [Item 4. Controls and Procedures](index=102&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control - Disclosure controls and procedures were **effective** as of June 30, 2021[359](index=359&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three months ended June 30, 2021[360](index=360&type=chunk) [PART II - Other Information](index=104&type=section&id=PART%20II%20-%20Other%20Information) [Item 1A. Risk Factors](index=104&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes in risk factors from those disclosed in the 2020 Annual Report on Form 10-K - No material changes in risk factors from the 2020 Annual Report on Form 10-K[363](index=363&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=104&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Corporation's share repurchase program activity during the second quarter of 2021 - The Corporation's Board authorized a program to repurchase up to **365,000 shares** of common stock through November 30, 2021[364](index=364&type=chunk) Issuer Purchases of Equity Securities (Q2 2021) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1, 2021 - April 30, 2021 | 525 | $43.60 | | May 1, 2021 - May 31, 2021 | 52,641 | $47.85 | | June 1, 2021 - June 30, 2021 | 38,767 | $51.40 | | Total (Q2 2021) | 91,933 | $49.34 | - As of June 30, 2021, the Corporation repurchased **97,714 shares** for an aggregate cost of **$4.7 million** under the program[364](index=364&type=chunk) [Item 6. Exhibits](index=105&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications and XBRL data - Exhibits include the Agreement and Plan of Reorganization, corporate governance documents, CEO/CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL financial statements[367](index=367&type=chunk) [Signatures](index=106&type=section&id=Signatures) This section contains the duly authorized signatures of the Corporation's CEO and CFO, affirming the report filing - The report is signed by Thomas F. Cherry, President and Chief Executive Officer, and Jason E. Long, Executive Vice President, Chief Financial Officer and Secretary, on August 3, 2021[371](index=371&type=chunk)

Table of Contents or UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2021 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to _________ Commission File Number 000-23423 C&F FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Vir ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2020 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to _________ Commission file number 000-23423 C&F FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Virginia ...

Table of Contents or UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2020 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to _________ Commission File Number 000-23423 C&F FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) ...

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements reflect significant changes driven by the Peoples Bankshares acquisition and the COVID-19 pandemic [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $1.98 billion, driven by increases in loans and deposits following an acquisition Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 (unaudited) | December 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$1,983,204** | **$1,657,432** | | Loans, net | $1,292,896 | $1,082,318 | | Total Deposits | $1,645,789 | $1,291,250 | | **Total Liabilities** | **$1,799,939** | **$1,492,153** | | **Total Equity** | **$183,265** | **$165,279** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net income declined in Q2 and H1 2020 due to a significant increase in the provision for loan losses Key Income Statement Data (in thousands, except per share) | Metric | Q2 2020 | Q2 2019 | Six Months 2020 | Six Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $20,254 | $20,625 | $40,857 | $40,272 | | Provision for Loan Losses | $3,600 | $1,810 | $6,250 | $4,205 | | Noninterest Income | $11,828 | $8,202 | $18,576 | $15,305 | | Noninterest Expenses | $23,792 | $19,549 | $43,877 | $39,226 | | **Net Income (to Corp.)** | **$3,746** | **$5,843** | **$7,324** | **$9,614** | | **EPS (basic & diluted)** | **$1.03** | **$1.69** | **$2.01** | **$2.77** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating and investing activities increased significantly, while financing activities provided substantial cash inflow Six Months Ended June 30 Cash Flow Summary (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(66,755) | $(27,512) | | Net Cash Used in Investing Activities | $(121,774) | $(17,395) | | Net Cash Provided by Financing Activities | $103,396 | $24,549 | | **Net Decrease in Cash** | **$(85,133)** | **$(20,358)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key disclosures detail the financial impact of the COVID-19 pandemic and the acquisition of Peoples Bankshares - The COVID-19 pandemic has caused significant economic disruption, and estimates for the **allowance for loan losses** at June 30, 2020, include expected losses related to the pandemic[35](index=35&type=chunk) - On January 1, 2020, the Corporation completed the acquisition of Peoples Bankshares, Incorporated for an aggregate purchase price of **$22.19 million** in cash and stock, resulting in **goodwill of $10.77 million**[40](index=40&type=chunk)[55](index=55&type=chunk)[59](index=59&type=chunk) - Beginning in April 2020, the Corporation originated loans under the **Paycheck Protection Program (PPP)**, which are fully guaranteed by the SBA[47](index=47&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income declined due to higher loan loss provisions and merger costs, partially offset by strong mortgage banking performance [Overview](index=50&type=section&id=Overview) Net income and EPS declined in Q2 and H1 2020, impacted by loan loss provisions and merger expenses Financial Performance Measures | Metric | Q2 2020 | Q2 2019 | H1 2020 | H1 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Income (in millions) | $3.7 | $5.8 | $7.4 | $9.6 | | EPS | $1.03 | $1.69 | $2.01 | $2.77 | | Annualized ROE | 8.41% | 15.07% | 8.34% | 12.54% | | Annualized ROA | 0.77% | 1.51% | 0.78% | 1.26% | - **Adjusted net income**, excluding one-time items, was **$4.0 million ($1.11/share)** for Q2 2020 and **$8.4 million ($2.30/share)** for the first six months of 2020[176](index=176&type=chunk) [Impact of and Response to the COVID-19 Pandemic](index=52&type=section&id=Impact%20of%20and%20Response%20to%20the%20COVID-19%20Pandemic) The Corporation identifies key pandemic-related risks and outlines its response, including PPP loans and payment deferrals - The Corporation recorded additional provisions for loan losses of approximately **$3.5 million in Q2 2020** and **$5.5 million in H1 2020** due to expected asset quality deterioration from the pandemic[183](index=183&type=chunk) - As of June 30, 2020, the company originated **1,210 PPP loans** with an aggregate principal of **$88.9 million**[190](index=190&type=chunk) - The company provided payment deferrals or interest-only periods on **200 loans** with aggregate balances of **$94.9 million** as of June 30, 2020[190](index=190&type=chunk) [Results of Operations](index=64&type=section&id=Results%20of%20Operations) Net interest margin decreased while noninterest income grew significantly, driven by record mortgage banking activity - Annualized **net interest margin decreased by 114 basis points to 4.61%** for Q2 2020 compared to Q2 2019, primarily due to lower average yields on loans[232](index=232&type=chunk) - Total noninterest income **increased by $3.6 million (44.2%)** in Q2 2020, largely due to higher gains on sales of loans and mortgage banking fee income from record loan production[246](index=246&type=chunk) - Total noninterest expenses **increased by $4.2 million (21.7%)** in Q2 2020, driven by merger-related expenses, assumption of operating costs from the Peoples acquisition, and higher compensation tied to mortgage volume[253](index=253&type=chunk) [Asset Quality](index=77&type=section&id=Asset%20Quality) The provision for loan losses increased, and the allowance for loan losses grew to reflect pandemic-related economic impacts Allowance for Loan Losses Activity (in thousands) | Metric | Q2 2020 | Q2 2019 | H1 2020 | H1 2019 | | :--- | :--- | :--- | :--- | :--- | | Beginning Balance | $33,298 | $33,589 | $32,873 | $34,023 | | Provision for Loan Losses | $3,600 | $1,810 | $6,250 | $4,205 | | Net Charge-offs | $(804) | $(1,998) | $(3,029) | $(4,827) | | **Ending Balance** | **$36,094** | **$33,401** | **$36,094** | **$33,401** | - The consumer finance segment's allowance for loan losses as a percentage of loans **increased to 7.52%** at June 30, 2020, from 6.96% at December 31, 2019, reflecting probable losses from the COVID-19 pandemic[288](index=288&type=chunk) [Financial Condition](index=88&type=section&id=Financial%20Condition) Total assets, loans, and deposits grew substantially, primarily due to the Peoples acquisition and PPP loan origination - **Total assets increased by $325.8 million** since December 31, 2019, to **$2.0 billion**, primarily due to the Peoples acquisition ($190.6 million in assets) and deposit growth[297](index=297&type=chunk) - Total loans held for investment grew to **$1.33 billion**, with commercial, financial, and agricultural loans making up **51% of the portfolio**[300](index=300&type=chunk) - **Deposits increased by $354.5 million to $1.65 billion**, driven by the Peoples acquisition ($171.8 million) and organic growth influenced by PPP loans and government stimulus[318](index=318&type=chunk) [Liquidity and Capital Resources](index=94&type=section&id=Liquidity%20and%20Capital%20Resources) The Corporation maintains a strong liquidity position and remains well-capitalized, with all ratios exceeding regulatory minimums - Liquid assets, including cash and non-pledged securities, totaled **$204.85 million** at June 30, 2020[331](index=331&type=chunk) Regulatory Capital Ratios (C&F Bank) - June 30, 2020 | Ratio | Actual | Minimum Requirement | | :--- | :--- | :--- | | Total Capital (to Risk-Weighted Assets) | 13.5% | 8.0% | | Tier 1 Capital (to Risk-Weighted Assets) | 12.3% | 6.0% | | Common Equity Tier 1 Capital | 12.3% | 4.5% | | Tier 1 Capital (to Average Assets) | 9.6% | 4.0% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=102&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk disclosures remain unchanged from the Annual Report on Form 10-K for the year ended December 31, 2019 - There have been **no significant changes** to the market risk disclosures since the 2019 Form 10-K[355](index=355&type=chunk) [Item 4. Controls and Procedures](index=102&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were **effective** as of June 30, 2020[356](index=356&type=chunk) - The integration of Peoples' legacy systems and the shift to remote work due to COVID-19 **did not materially affect** the company's internal control over financial reporting[359](index=359&type=chunk)[360](index=360&type=chunk) [PART II - Other Information](index=104&type=section&id=PART%20II%20-%20Other%20Information) [Item 1A. Risk Factors](index=104&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor details the significant adverse effects of the COVID-19 pandemic on the economy and financial markets - A **new risk factor** has been added detailing the actual and potential adverse effects of the COVID-19 pandemic on the Corporation's results of operations and financial condition[363](index=363&type=chunk) - Consequences of the pandemic may include market volatility, lower interest rates, increased unemployment, **significant delinquencies and credit losses**, and potential impairment of assets like securities and goodwill[365](index=365&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=106&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The $5.0 million share repurchase program expired in May 2020 and was not renewed, with no repurchases in Q2 2020 - The share repurchase program **expired on May 31, 2020**, and has not been renewed[370](index=370&type=chunk)[371](index=371&type=chunk) [Item 6. Exhibits](index=107&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL data

Table of Contents or UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2020 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to _________ Commission File Number 000-23423 C&F FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Vir ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2019 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to _________ Commission file number 000-23423 C&F FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Virginia ...

Table of Contents or UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2019 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to _________ Commission File Number 000-23423 C&F FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) ...

[PART I - Financial Information](index=2&type=section&id=PART%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for C&F Financial Corporation as of and for the periods ended June 30, 2019, and December 31, 2018 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $1.568 billion at June 30, 2019, primarily due to loan growth, with corresponding increases in liabilities and equity Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 (unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$1,567,996** | **$1,521,411** | | Total cash and cash equivalents | $94,655 | $115,013 | | Loans held for sale, at fair value | $89,185 | $41,895 | | Loans, net | $1,056,934 | $1,028,097 | | **Total Liabilities** | **$1,408,645** | **$1,369,453** | | Total deposits | $1,210,209 | $1,181,661 | | **Total Equity** | **$159,351** | **$151,958** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income attributable to the Corporation increased to $9.61 million for H1 2019, driven by higher net interest and noninterest income Statement of Income Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net Interest Income | $40,272 | $40,155 | | Provision for loan losses | $4,205 | $5,300 | | Noninterest Income | $15,305 | $13,687 | | Noninterest Expenses | $39,226 | $37,300 | | **Net Income Attributable to C&F** | **$9,614** | **$8,962** | | **Net income per share - diluted** | **$2.77** | **$2.56** | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income attributable to the Corporation significantly increased to $12.17 million for H1 2019, driven by positive other comprehensive income Comprehensive Income Highlights (in thousands) | Metric | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net Income | $9,613 | $8,962 | | Other comprehensive income (loss), net of tax | $2,552 | $(2,310) | | **Comprehensive income attributable to C&F** | **$12,166** | **$6,652** | [Consolidated Statements of Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Equity) Total equity increased to $159.4 million by June 30, 2019, driven by net income and comprehensive income, partially offset by dividends and repurchases - Key changes in equity for the six months ended June 30, 2019 include: net income of **$9.6 million**, other comprehensive income of **$2.6 million**, cash dividends of **$2.6 million** (**$0.74 per share**), and common stock repurchases of **$3.5 million**[23](index=23&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash and cash equivalents decreased by $20.4 million for H1 2019, primarily due to cash used in operating and investing activities Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(29,612) | $15,535 | | Net cash used in investing activities | $(15,785) | $(16,972) | | Net cash provided by financing activities | $25,039 | $17,757 | | **Net (decrease) increase in cash** | **$(20,358)** | **$16,320** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details accounting policies, financial statement components, and the impact of new accounting standards like ASC 842 and the upcoming ASC 326 - On January 1, 2019, the Corporation adopted ASC 842, "Leases," resulting in the recognition of a lease liability of approximately **$3.14 million** and a corresponding right-of-use asset[38](index=38&type=chunk)[42](index=42&type=chunk) - The Corporation is preparing for the adoption of ASC 326, "Financial Instruments – Credit Losses," which will introduce an expected loss model and is anticipated to significantly change the allowance for credit losses and potentially reduce shareholders' equity[43](index=43&type=chunk)[44](index=44&type=chunk) - The Corporation operates in three principal business segments: retail banking, mortgage banking, and consumer finance, with inter-segment transactions eliminated in consolidation[132](index=132&type=chunk)[137](index=137&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Corporation's financial performance, condition, and key business trends, highlighting net income growth driven by mortgage and retail banking segments [Overview](index=45&type=section&id=Overview) Net income increased to $9.6 million for H1 2019, driven by retail and mortgage banking, despite a decline in consumer finance segment income Key Financial Performance Measures (H1 2019 vs H1 2018) | Metric | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Net Income | $9.6 million | $9.0 million | | Diluted EPS | $2.77 | $2.56 | | Annualized ROE | 12.54% | 12.62% | | Annualized ROA | 1.26% | 1.19% | - Retail Banking net income rose to **$5.4 million** in H1 2019 from **$4.8 million** in H1 2018, driven by higher interest income from improved PCI loan performance and higher average loans[187](index=187&type=chunk)[188](index=188&type=chunk) - Mortgage Banking net income increased to **$1.7 million** in H1 2019 from **$1.2 million** in H1 2018, fueled by a surge in mortgage loan originations to **$385.6 million** from **$347.6 million**[193](index=193&type=chunk)[194](index=194&type=chunk) - Consumer Finance net income decreased to **$3.2 million** in H1 2019 from **$3.7 million** in H1 2018, due to lower loan yields and higher borrowing costs, partially offset by a **$1.2 million** decline in the provision for loan losses[195](index=195&type=chunk)[196](index=196&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Net interest income remained stable at $40.6 million for H1 2019, while noninterest income grew 11.8% and noninterest expenses rose 5.2% Net Interest Margin Analysis (Annualized) | Period | Net Interest Margin | Yield on Earning Assets | Cost of Interest-Bearing Liabilities | | :--- | :--- | :--- | :--- | | Q2 2019 | 5.75% | 6.76% | 1.35% | | Q2 2018 | 5.69% | 6.44% | 0.99% | | H1 2019 | 5.71% | 6.68% | 1.30% | | H1 2018 | 5.77% | 6.51% | 0.97% | - Total noninterest income increased by **$1.6 million** (**11.8%**) in H1 2019 compared to H1 2018, mainly due to higher gains on sales of loans at the mortgage banking segment and unrealized gains related to the non-qualified deferred compensation plan[222](index=222&type=chunk) - Total noninterest expenses increased by **$1.9 million** (**5.2%**) in H1 2019, primarily from higher salaries and benefits expense linked to the deferred compensation plan and increased operating costs at the retail banking segment for technology and personnel[225](index=225&type=chunk) [Asset Quality](index=57&type=section&id=Asset%20Quality) Asset quality remained strong with the allowance for loan losses decreasing to $33.4 million and improved net charge-off ratios in consumer finance Allowance for Loan Losses Activity (in thousands) | Metric | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Beginning Balance | $34,023 | $35,726 | | Provision for loan losses | $4,205 | $5,300 | | Net loans charged off | $(4,827) | $(5,633) | | **Ending Balance** | **$33,401** | **$35,393** | - The consumer finance segment's annualized net charge-off ratio improved to **3.15%** in H1 2019 from **3.85%** in H1 2018, due to purchasing automobile loan contracts with higher credit metrics since 2016[197](index=197&type=chunk)[231](index=231&type=chunk) - Retail banking nonperforming assets decreased to **$1.3 million** at June 30, 2019, from **$1.7 million** at December 31, 2018, consisting mainly of **$991,000** in nonaccrual loans[248](index=248&type=chunk)[251](index=251&type=chunk) - Total Troubled Debt Restructurings (TDRs) decreased to **$4.45 million** at June 30, 2019, from **$5.45 million** at December 31, 2018[258](index=258&type=chunk)[260](index=260&type=chunk) [Financial Condition](index=63&type=section&id=Financial%20Condition) Total assets grew to $1.6 billion by June 30, 2019, driven by loan growth, while deposits increased and investment securities decreased - Total loans held for investment grew to **$1.09 billion** at June 30, 2019, from **$1.06 billion** at year-end 2018, with the commercial, financial, and agricultural category making up **44%** of the portfolio[266](index=266&type=chunk) - Total deposits increased by **$28.5 million** in the first half of 2019, primarily due to a **$50.0 million** increase in time deposits, partially offset by a **$32.7 million** decrease in savings and interest-bearing demand deposits[273](index=273&type=chunk) - The Corporation uses interest rate swaps to manage risk, including cash flow hedges on **$25.0 million** of trust preferred capital notes and back-to-back swaps with commercial loan customers with a total notional amount of **$125.6 million**[279](index=279&type=chunk)[280](index=280&type=chunk) [Liquidity and Capital Resources](index=66&type=section&id=Liquidity%20and%20Capital%20Resources) The Corporation maintains strong liquidity and capital, with C&F Bank exceeding regulatory capital ratios and continuing its share repurchase program C&F Bank Regulatory Capital Ratios (June 30, 2019) | Ratio | Actual | Minimum Requirement | To Be Well Capitalized | | :--- | :--- | :--- | :--- | | Total Capital (to Risk-Weighted Assets) | 14.4% | 8.0% | 10.0% | | Tier 1 Capital (to Risk-Weighted Assets) | 13.2% | 6.0% | 8.0% | | Common Equity Tier 1 Capital | 13.2% | 4.5% | 6.5% | | Tier 1 Capital (to Average Assets) | 11.0% | 4.0% | 5.0% | - At June 30, 2019, the Corporation had total available funding capacity of **$297.7 million** from sources including FHLB, the Federal Reserve Bank, and a revolving bank line of credit[287](index=287&type=chunk)[288](index=288&type=chunk) - A new **$5.0 million** share repurchase program was authorized effective June 1, 2019, through May 31, 2020, with **$4.4 million** remaining available as of June 30, 2019[201](index=201&type=chunk)[295](index=295&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no significant changes in the Corporation's quantitative and qualitative market risk disclosures since the 2018 Annual Report on Form 10-K - There have been no significant changes in market risk disclosures since the 2018 Form 10-K[297](index=297&type=chunk) [Item 4. Controls and Procedures](index=69&type=section&id=Controls%20and%20Procedures) Management concluded that the Corporation's disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were effective as of June 30, 2019[298](index=298&type=chunk) - There were no material changes to the Corporation's internal control over financial reporting during the second quarter of 2019[301](index=301&type=chunk) [PART II - Other Information](index=71&type=section&id=PART%20II%20-%20Other%20Information) [Item 1A. Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes in the Corporation's risk factors since those disclosed in the 2018 Annual Report on Form 10-K - There have been no material changes in risk factors since the 2018 Form 10-K[303](index=303&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2019, the Corporation repurchased 32,980 shares of common stock at an average price of $49.41, with $4.4 million remaining for future repurchases Issuer Purchases of Equity Securities (Q2 2019) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2019 | 6,262 | $50.74 | | May 2019 | 14,618 | $48.41 | | June 2019 | 12,100 | $49.93 | | **Total Q2** | **32,980** | **$49.41** | - The Corporation has an authorized repurchase program for up to **$5.0 million** of its common stock, effective from June 1, 2019, to May 31, 2020[304](index=304&type=chunk) [Item 6. Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files, incorporating previously filed documents by reference - Exhibits filed include CEO/CFO certifications (31.1, 31.2, 32) and XBRL interactive data files (101 series)[307](index=307&type=chunk)